2013 (6) TMI 579 - AT - Central Excise

Interest on Refund - price escalation clause - Provisional assessment - supply of LPG cylinders to IOCL, BPCL and HPCL - Held that - The claim for refund dates back to 26-6-2006, which is the date on which they claimed refund on the basis of the order dated 12-6-2006 of the Commissioner (Appeals), who had directed sanction of Rs. 4,36,364/- to the assessees by setting aside the direction of the adjudicating authority for credit of the above mentioned amount to the Consumer Welfare Fund. It is not for the first time that the assessees claimed refund of the amount in question only in September, 2008, since claim for the amount ultimately sanctioned although reduced, was filed in 2006 June itself. It is clear that there has been a delay in sanction of the refund in December, 2008, well beyond the statutory period of three months. Therefore, the assessees claimed for interest at the appropriate rate due to the delay in sanction of the refund merits acceptance. The assessees are held to be eligible to interest after the expiry of three months from 26-6-2006 till the date of payment of interest at the appropriate rate. - Decided in favor of assessee.

Summary

Issues:
Provisional assessment for LPG cylinders supplied to oil companies, refund claim rejection, interest on delayed refund sanction.

Provisional Assessment Issue:
The assessees, manufacturers of LPG cylinders, requested provisional assessment due to fixed prices by oil companies. Extensions were granted until 31-12-2005. Finalization was done in 2006, resulting in excess duty refund of Rs. 4,36,364/- credited to Consumer Welfare Fund. Commissioner (Appeals) directed the refund to the assessees for the period from 21-8-2000 to 31-5-2001. Subsequent refund claim rejection by Dy. Commissioner led to an appeal where the Commissioner (Appeals) upheld the earlier order, precluding further questioning. The assessees filed a refund claim on 26-9-2008, reduced to Rs. 4,42,122/-, seeking interest due to delay beyond the statutory three-month period.

Refund Claim Rejection Issue:
The initial refund claim in 2006 was based on the Commissioner (Appeals) order directing the refund to the assessees. However, the delay in sanctioning the refund until December 2008 was beyond the statutory three-month period. The assessees rightfully claimed interest for the delay, which was granted by the Tribunal, allowing the appeal and setting aside the impugned order.

Interest on Delayed Refund Sanction Issue:
The assessees' claim for interest on the delayed refund sanction after the expiry of the statutory three-month period from the initial refund claim date in 2006 was deemed valid by the Tribunal. The delay in sanctioning the refund until December 2008 warranted the assessees' entitlement to interest at an appropriate rate, as held by the Tribunal in setting aside the impugned order and allowing the appeal.

In conclusion, the Tribunal allowed the appeal filed by the assessees concerning the delayed refund sanction and the entitlement to interest due to the delay beyond the statutory period. The decision emphasized the assessees' eligibility for interest after the three-month period from the initial refund claim date in 2006 until the payment date, setting aside the rejection and upholding the claim for interest.